Retailers report worst sales in 13 years

Hopes of a revival in fortunes on the high street this month suffered a blow after a survey showed sales volumes fell to a six-month low in March.

Hopes of a revival in fortunes on the high street this month suffered a blow after a survey showed sales volumes fell to a six-month low in March.

A poll of 200 retailers by the CBI found 40 per cent said sales were down while 31 per cent reported a rise, leaving a balance of minus 9 per cent, the worst since September. In fact, retailers claimed the volume of sales for the time of year was down 37 per cent, the worst reading since November 1992, when the UK was in recession.

The survey comes a fortnight after official figures showed that non-food sales between December and February suffered their biggest fall for any Christmas period in 28 years.

"The message is simple," John Butler, the UK economist at HSBC, said. "The slowdown in retail spending is well under way."

The CBI said stores selling furniture and carpets - goods with the closest link to the housing market - had suffered the sharpest falls, followed by hardware, china, DIY, chemists and specialist food shops.

Sales of durable goods such as washing machines and DVD players, reported the fastest year-on-year growth, followed by grocers, confectioners, booksellers, stationers and clothes stores.

Doug Godden, the CBI's head of economic analysis, said retailers' expectations for sales growth over the coming weeks had been disappointed for a third month in a row.

"Some of this poor performance might be attributed to the wintry weather at the start of March and a reluctance for consumers to spend ahead of the Budget," he said.

"But there is no doubt that sales growth has slowed on an underlying basis since the turn of the year."

Analysts in the City said the gloomy survey would provide further evidence for the Bank of England to keep interest rates on hold when it meets next week.

They said its Monetary Policy Committee would have to balance the weakness in the consumer economy with signs of inflationary pressures from the labour and product markets.

Matthew Sharratt, an economist at Bank of America, said: "Today's data support our case for no further hikes in this cycle, with the first move being a cut in the latter part of the year."

But Howard Archer at Global Insight said he expected consumer spending to pick up on the back of record employment, rising earnings growth and price cuts on the high street.

"We expect one more rate hike although it may be delayed until later in the summer rather than occurring in May," he said.

Separate figures showed pay settlements in manufacturing remained stable at 2.7 per cent in the three months to February, the employers' group EEF said.